Apple puts audio IP on hold for iPhone 5

LONDON – Audience Inc., a supplier of audio processing ICs and intellectual property, said Apple is unlikely to "enable" Audience's IP in its next generation iPhone 5, which is expected to be launched on Wednesday (Sept. 12).

Audience (Mountain View, Calif.) launched an initial public offering of company shares in May.

Audience had gained design wins in previous iPhone generations with its dedicated audio processors. Rather than representing a design loss in the upcoming iPhone 5, however, the latest move could mean that Audience will continue to supply Apple with separate audio processors and that Apple has opted for now not to shift the iPhone 5's audio processing function into an application processor.

Audience processors also have been designed into other smartphone and tablet computers, including those made by Samsung, HTC, Huawei, Acer, Sharp and LG.

In a Sept. 6 statement, Audience said it had developed and licensed a new generation of audio processing IP for use in Apple's devices, adding that it "now believes that it is unlikely that the OEM will enable Audience's processor IP in its next generation mobile phone. Audience is not aware of any intended changes by this OEM to its use of Audience's processors or processor IP in prior generations of the OEM's mobile phones."

Audience's share price fell from about $19 to a low of $5.80 on last week's announcement, but was trading at over $7 on Monday (Sept. 10).

A day after Audience's iPhone announcement, the Howard G. Smith law firm said it is investigating potential claims against Audience involving alleged violations of U.S. securities laws. The investigation focuses on alleged false and misleading statements by Audience between May 10 and Sept. 6, 2012.

Audience's IPO in May coincided with its recording its first licensing revenues after several years operating solely as a fabless chip vendor. For the first quarter of 2012, Audience reported $11.7 million of revenue from IP licensing out of sales revenue totaling $31.1 million.

Peter Santos, president and CEO of Audience, added last week: "While we are disappointed by this development, we are
confident in the diversification of our business and see sustainable
growth in 2012 and beyond. As such we are raising guidance for the third
quarter of 2012."